Effects of weak productivity
Researches conducted by economists have developed how trends in productivity might be an effect to the inflation and the economic growth of the country. Despite the effects caused by the failures of the factors of productivity, there has been an increase in the laborers work hours and their corresponding compensation. It’s due to this reason that the Federal Reserve has been developing a firm wage growth in order to support the economic growths and development. This is due to the fact that the American economy is about to attain its full strength in order for it to the interest rates that are rising.
Major companies in the US soils are currently facing a series of toxic combination of a dismal productivity growth in their production. This dismal production has caused various problems in the operations for instance, the company’s will experience slow hiring, and at the same time accelerating wages thus resulting to a sluggish demand from other producers. These effects will thus cause a burden to the already fragile economy.
The labor productivity which can commonly be described as the amount of goods produced per hour by the employees fell to about 0.6% at an annual rate within the first quarter of the year. This is in accordance to the report developed by the labor department. Despite the drop being an improvement from the initial financial year, it further crippled the economy’s ability to improve the living standards of the American people. With an increase in productivity, the company in question will have a boost in its corporate profits and as a result get more finances to settle their workers wages. There has been a steady increase in productivity since the end of the World War II at an average of about 2.2% per annum. But in recent years, the productivity has just developed insignificantly at the rate of 0.5% per annum. There is thus need to increase productivity of...